Suncor Energy to raise C$2.5 billion to fund possible purchases

Reuters Staff

2 Min Read

TORONTO (Reuters) - Canadian oil and gas producer Suncor Energy Inc (SU.TO) said it would raise C$2.5 billion ($2 billion) through the sale of new shares to enable it to increase its stake in its Syncrude oil sands joint venture and to fund other possible acquisitions.

The company said it would sell 71.5 million common shares at a price of C$35 per share, a discount to its closing price of C$36.5 per share on Tuesday.

It said the proceeds would be used to finance a previously announced deal to acquire an additional 5 percent stake in its Syncrude oil sands joint venture from Murphy Oil Corp’s (MUR.N) Canadian unit for about C$937 million and to give it the flexibility to pursue other “opportunistic growth transactions.”

Bankers have forecast an upturn in energy-related M&A activity this year with the low price of oil and recent cuts to companies’ credit lines leaving some companies needing to look for new investment or buyers in order to survive.

Larger oil producers such as Suncor may be in a position to take advantage of sector consolidation, they say.

The share offer will be made through a syndicate of underwriters led by TD Securities, CIBC Capital Markets and J.P. Morgan Securities Canada, Suncor said.